Corporate Legal Services

7 Persistent Myths About Intellectual Property

Posting a copyrighted photo on a blog cost a small public relations company thousands of dollars, even though the photo wasn’t labeled with a copyright notice. Labeling products with a patent number that didn’t match the exact model meant a construction-stilts manufacturer must pay large fines.

And a loophole in the intellectual property clause of an employee contract created nearly a decade of court battles and cost Mattel the Bratz doll empire.

These are just a few examples that show how common intellectual property mistakes can be extremely costly for companies of any size. Here are seven of the most prevalent myths surrounding intellectual property and how misconceptions could hurt your company.

Myth 1: Businesses automatically own all intellectual property created by employees and contractors.Many business owners mistakenly assume that when they hire an employee or a contractor, they as a matter of course own full rights to their work. But unless the employee or vendor contract explicitly states that the company owns the rights to any intellectual property created by the employee or contractor, entrepreneurs may be surprised to find that they have limited or no rights to the work.

Myth 2: A patent grants worldwide protection. Obtaining a patent from the U.S. Patent Office generally protects only the patent within the U.S. Company managers who want to conduct business abroad have to file for a patent in each country in which they want to operate and must comply with each country’s unique patent laws.

Myth 3: If it sounds “official,” it probably is. Scammers often prey on entrepreneurs’ desire to protect intellectual property. Common scams include emails that say the company needs to pay a fee to protect its trademark or domain name, or contain bogus invoices for protection services. Because the emails come from organizations that sound official and include specific information about the business, many owners pay the fees without question.

Myth 5: Trade secrets provide easy catch-all protection. Many owners of young businesses mistakenly think any information not covered by a copyright or patent can easily be protected as a trade secret. But trade secret protection can be difficult to enforce in court, and companies have to prove all of the following:

(a) The information gives the company a competitive advantage by virtue of being unknown.

(b) The company took reasonable measures to protect the information.

(c) The information is not generally known to the public or competitors.

Myth 6: Markings don’t matter.Some business people misuse intellectual property markings, either by using them too much or too little. For example, marking a patent number on items that don’t bear the exact patented design can result in fines of as much as $500 for each mislabeled item. On the other hand, failing to use trademark markings such as ™ and ® can lead to a brand name becoming a generic term that has no trademark protection, as occurred with formerly trademarked terms such as aspirin, zipper and thermos.

Myth 7: I can wait to figure out my intellectual-property strategy. Companies have no time to waste in creating an intellectual property strategy, especially when it comes to patents. Last year the U.S. patent system changed from a “first to invent” system to a “first to file” system, meaning that patents are now awarded based on who files the application first, not who thought of the idea first.

Intellectual property matters leave little room for error, and a smart strategy concerning this should be a top priority for every entrepreneur. Every new business owner should have a trusted intellectual property consultant to help dispel the myths and build a sound strategy to best protect the company.